Export prospects rise though forestry decree

Export prospects rise though forestry decree, illustration photo

Later this week, a joint technical meeting on the next steps for the implementation of the Forest Law Enforcement, Governance and Trade Voluntary Partnership Agreement (FLEGT-VPA) is to take place at the office of the EU Delegation to Vietnam in Hanoi.

The FLEGT-VPA, which took effect in June 2019, is aimed to help Vietnam improve forest governance, address illegal logging, and promote trade in verified legal timber products from Vietnam to the EU and other markets

Over a week ago, the Vietnamese government enacted Decree No.102/2020/ND-CP on the Timber Legality Assurance System of Vietnam (VNTLAS) which will take effect on October 30. The decree is a part of the country’s FLEGT-VPA, which Vietnam was just the third country in the world to ink in 2018. The FLEGT-VPA ensures that timber exported to the EU from Vietnam does not come from illegal sources.

“The VNTLAS decree addresses important elements of the VPA related to the import and export of timber and timber products (TTPs). It also provides the basis for a classification system, albeit one specific to enterprises engaged in processing and exporting timber, and thus lacking some core elements foreseen in the VPA,” stated a release from the EU Delegation to Vietnam.

“Such a system covering importers and domestic producers alike is foreseen in the VPA as a tool to facilitate legality assurance throughout the supply chain in Vietnam and is a core element of the VPA.”

Under the decree, which clearly defines standards of legally-imported TTPs, the owners of such imports must be responsible to the law for the legal origins of the products. They must obey all regulations and requirements about providing sufficient information about the wood origins.

Giorgio Aliberti, Ambassador of the European Union to Vietnam said, “The scope of the VPA extends to all operators, involved in all parts of VNTLAS supply chains and for timber destined to all domestic and export markets.

As such, the decree is a step towards these commitments, but should its scope not be aligned with the VPA by the time the decree becomes applicable, it might negatively affect Vietnamese exporters.”

Curbing illegal logging

According to the European Parliament, the FLEGT-VPA will help turn Vietnam into a more attractive investment spot for European investment. Currently, European consumers and businesses have growing demands for transparent imported wood products.

“This will further prompt European investors to come to Vietnam to both implement projects directly and cooperate with local partners in exports,” said Vice President of the European Parliament Heidi Hautala during her working visit to Vietnam last year.

“The VPA will help improve forest governance, address illegal logging, and promote trade in verified legal timber products from Vietnam to the EU and other markets,” Hautala added.

Following six years of negotiations, the FLEGT-VPA was clinched by both Vietnam and the EU in October 2018 in Brussels.

Vietnam imports timber from some 80 countries – in recent years, main suppliers have included Cambodia, Laos, China, the US, and Malaysia. Since the FLEGT-VPA entered into force, all TTPs arriving in the EU from Vietnam have been carrying a FLEGT license issued by Vietnam. Products covered by the FLEGT-VPA include all those required by the EU regulation establishing a FLEGT licensing scheme, which are a minimum requirement for VPAs, such as logs, sawn timber, railway sleepers, plywood, and veneer.

Nguyen Ton Quyen, vice chairman of the Vietnam Timber and Forest Product Association, told VIR that the FLEGT-VPA will enable Vietnam to increase its TTP export turnover from the EU to more than $1 billion a year, from $864.6 million last year.

Spur on TTP exports

Currently the EU market purchases about 12-15 per cent of Vietnam’s total TTPs annually, with the main buyers being Germany, France, the UK, Spain, and Italy.

“All TTPs from Vietnam have transparent origins, and once entering the EU market successfully, Vietnam’s TPP exports may also be seen in many other markets because the EU standard is on top of the world in terms of strictness,” Quyen said.

In a specific case, Taiwanese-backed Tsung Chua Wood Processing Co., Ltd. in the southern province of Dong Nai has been importing timber materials from the EU and some African nations with clear origins.

“Due to COVID-19, our exports to the EU have been partly halted. However, we have resumed exports since July and expect that the FLEGT-VPA will help TTP exporters in Vietnam to have more opportunities to boost exports to the EU market,” said a company representative.

According to the MARD, Vietnam is one of the world’s leading wood processing and exporting countries with an export turnover of $8 billion in 2017, and more than $9 billion in 2018. The figure hit $7.32 billion in the first eight months of 2020, up 9.6 per cent on-year.